The fox had its teeth gripped round little Morag's body as her owner Claire MacKenzie, 59, made dinner in her kitchen.
"There are foxes round here all the time so I'd checked there were none in the garden before letting her out," she said.
"I'd seen her dancing round the back door. Then out of the corner of my eye I saw a fox come from nowhere and grab hold of her.
"She managed to wriggle free, came in screaming and hid under the television.
"She was covered in puncture wounds from the fox's teeth and lost some of her fur. She was very shocked.
"I took her to the emergency vet and she didn't move for two weeks. It doesn't bear thinking about what could have happened. I was very stressed."
She urges owners of other small dogs to keep a careful eye on them when foxes may be about.
And she has asked residents around her area, Beech Lane, Earley, not to encourage foxes by leaving out food for them. She suggests it would also help if Wokingham Borough provided wheelie bins so household rubbish was not left out in bags for collection.
Ducklings and cygnets have disappeared from nearby Maiden Erlegh nature reserve lake, she said. She suggested foxes, rats or larger birds may have been responsible.
The Wokingham Paper was told there are no cygnets this year because the female is away being treated for an injury.
Brave Morag's wounds later recovered well enough to beat dogs many times her size to gain second place at Hurst Show's terrier race earlier this summer. Morag, weighing just over a kilo, is famed for her speed: she has been fastest dog at Swallowfield Show.
Cllr Norman Jorgensen, Wokingham Borough council's executive member for Environment, Leisure and Libraries, and a member of the Public Protection Partnership board, said: "We were very sorry to hear of the unfortunate attack on a resident's dog, and understand that this is distressing both for the animal and the owner.
"The council does not have a remit to control the local fox population and there is no legal responsibility for councils to do so. But there is advice we can give.
"Make sure small dogs and puppies are inside at night, and take the right fox-proofing precautions for outside hutches, if that is where you keep guinea pigs or rabbits. Raise the hutches above ground level, and check for any signs where a fox may be trying to get access.
"We also suggest that if you witness your animal getting into a scrape with a fox, you should take your pet to the vet for a check up to make sure no parasites have transferred."
He added that the council had not recorded any complaints about foxes for the last two years.
"In relation to our rubbish collections, we will be staying with blue bags and do not have any plans to change this system to wheelie bins at this time," Cllr Jorgensen continued. "We know that it is not always convenient to put your rubbish out first thing, with many residents needing to place their rubbish for collection, outside at night.
"From April next year we will start collecting food waste, as well. We will provide containers which will keep the food waste safer. And it will also help reduce blue bags being attacked by animals.
"We do advise residents to present their blue bags in the following ways: on the top of their recycling boxes to avoid bags being ripped; contained in a dustbin that our crew will collect from; and if possible to present their rubbish and recycling by 6.30am on collection day."
